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Top 5 Employment Laws Every Small Business Owner Should Know

By: Nitish Sharma


Employment Laws Business Owners Should Know

For any business, especially a small one, hiring is not an easy task and there are a lot of areas that need attention to detail. Even with one simple mistake, any business can get into legal disputes with employees, which can incur huge costs. To avoid such situations, it is important to know the basics and comply with the federal laws that can make your business processes as simple and smooth as possible.

Here are the 5 main laws that you should implement if you are running a small, medium or a big business.

1. The Americans With Disabilities Act (ADA)

The Americans with Disabilities Act of 1990 (ADA) is a U.S. Labor law which forbids discrimination against individuals with disabilities in all areas of employment, whether procedures of job application, compensation, training, hiring, firing or other privileges. Disabled people are recognized as those individuals who have physical or mental impairment which does not limit a major life activity, or individuals with a record of similar kinds of impairment, and they are protected under the law.

The law ensures equal opportunities for this segment of society. So, it is the duty of the employer to offer benefits to employees falling under this Act. This act is applicable to employers having at least 15 or more employees.

Please note that under this law, you as a business owner, whether small or large, should also implement ADA sign installation in your organization to ensure easy accessibility for visually impaired employees.

2. Age Discrimination In Employment Act (ADEA)

Those who are 40 years of age or above are protected against any kind of employment discrimination under the ADEA. This law is applicable to employers having 20 or more employees.

On the contrary, there are circumstances when employers should consider age an attribute-qualification while hiring or promoting an employee. One example would be placing a limit on the age of pilots, to consider safety issues.

If you, as an employer, terminate employees aged 40 years or older, you may have to face certain legal responsibilities towards them, irrespective of termination of younger employees at the same time.

Whether it is a case of promotion, hiring, or benefits at the workplace, in no case will any employee falling in this age group be deprived of the rights that are offered to young employees.

3. Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act applies to all private, federal, state, and local government employers having a minimum of 50 employees. All the employers covered under this law should grant unpaid leave, up to 12 workweeks in a year, to an eligible employee for specific family and medical reasons. They include:

  • Birth and care of a new born baby of the employee
  • Care for spouse, child or parent in case of a serious ailment
  • The employee not in a condition to work due to major health issue
  • Care for a family member injured during military service

4. The National Labor Relations Act (NLRA)

The National Labor Relations Act was enacted by Congress in the year 1935, which ensures the protection of rights of both employees and employers to encourage collective bargaining, to organize trade unions, and to restrict some private sector labor and management practices than can hurt the general welfare of businesses, workers, and the U.S. economy. Industries like agriculture, airlines, railroads and government are exempt from this act.

5. The Fair Credit Reporting Act (FCRA)

In most cases, applicants or business owners never qualify for a loan. This is because they lack good credit history and have to deal with loan-related issues because of the unawareness of the ways to avoid faulty loans.

Here, the Fair Credit Reporting Act comes into play. It encourages accuracy, privacy and fairness of information in the files of consumer reporting agencies like credit bureau and specialty agencies. This act covers many rights:

  • You must be informed if your file has been used against you and the name of agency should also be disclosed which shared your information.
  • You have the right to know everything about yourself but you will need to show your identification, including social security number.
  • You have the right to know about your numerical summaries.
  • Consumer reporting agencies should ensure your information is accurate and complete.
  • You have the right to dispute incomplete or inaccurate information.


Whether you have a small business or a large one, hiring is an area which needs a lot of attention. If you are consulting with an employment lawyer, you will be able to understand these laws better and how they are applied in business.

Published: March 23, 2017

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